Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.

Thursday, August 27, 2009

AFTERTHOUGHTS - PART I

I will be using the next few TWTP posts to provide some “afterthoughts” on previously posted topics.

I recently traded “dueling blog posts” with Mary O’Keeffe of the relatively new and quite interesting tax blog BED BUFFALOES IN YOUR TAX CODE (click here to find out what “bed buffaloes” are) on the subject of testing requirements for licensing tax preparers – which was a continuation of what began as an email discussion with Enrolled Agent and ethics CPE instructor Kevin Huston.

You can view the “dueling posts” here (be sure to read all the comments) –

Mary teaches Income Tax Policy & Practice at Union College in upstate New York and runs the Union College Volunteer Income Tax Assistance (VITA) program, where Union College economics students with IRS training and certification prepare and e-file free income tax returns for low and moderate income Schenectady NY taxpayers. Her VITA site prepares 600+ returns per season..VITA is an IRS-sponsored program that “offers free tax help to low- to moderate-income (generally, $49,000 and below) people who cannot prepare their own tax returns”..In my 38 tax seasons I have had no hands-on experience or contact with the VITA program. I do not believe I have ever seen a tax return prepared by a VITA volunteer. So I have no personal experience from which to speak. Most of my knowledge of the workings of the program come from Mary’s posts and comments on the "tax blogosphere” and links from Mary's blog..I do applaud the ideals of the program. I also applaud the good work of the many VITA volunteers throughout the US, and the fact that the VITA volunteers restrict their work to simpler returns, knowing their strengths and limitations and not to “bite off more than they can chew”. However, as they deal with low income taxpayers they also deal apparently quite competently with such relatively complicated issues as Dependency, Filing Status, and the Earned Income Tax Credit, Child Tax Credit, and Credit for the Elderly..Most of the VITA volunteers are students and teachers. Unfortunately the demands of the tax filing season do not permit most practicing tax professionals, like myself, from volunteering for VITA and similar programs. We have a brief period of time (Feb 1 – April 15) to timely file 1040s and earn probably 70% or more of our annual income..Mary is a college professor and a VITA manager and volunteer, and not a practicing tax professional, and comes to the discussion from that unique point of view. Her comments on registration, licensure and testing are based on her experience with VITA. She calls for an annual competency test for tax preparers as a requirement of licensure, similar to the requirements for VITA volunteers..VITA volunteers are generally part-time, non-professional, seasonal tax preparers. As I said above mostly students and teachers. When I say “non-professional” I do not mean that the returns they prepare are not done “professionally” - but simply that they are not experienced year-round tax professionals. They do not prepare tax returns for a living..Given this fact it is very appropriate that these volunteers must pass a basic competency examination in order to participate in VITA, and that they must pass such a test each year if they are continuing volunteers..Plus, as these volunteers are in effect working for the IRS it is appropriate that they be tested annually as an arse-covering measure for the IRS..As I have posted and wrote time and again, I feel very strongly that there must be some kind of “grandfathering” exemption from an initial proficiency test for long-time experienced tax professionals in the licensing process. And I agree with most others that a one-time test is sufficient – there is no need for annual, or bi-annual (if one’s license must be renewed every other year), testing..In my proposal for registration and licensure VITA and other volunteer preparers would not need to be licensed as they do not prepare returns for a fee. I feel their current testing requirements to be more than adequate..There is a big difference between part-time seasonal volunteer preparers and experienced full-time professional preparers. What is appropriate and practical for one group is not necessarily appropriate or practical for the other..I await Mary’s comments on these afterthoughts, and I look forward to future blog discussions with Mary. Unlike with some other tax bloggers, who shall remain nameless, we can have a good spirited debate while maintaining mutual respect and courtesy. And by staying on topic and not veering off in personal attacks..TTFN

4 comments:

I'm not sure about the country, but at least in our area, however, it's definitely not true that most VITA volunteers are students and teachers.

The United Way of the Greater Capital District sponsors a coalition of all the VITA sites in our area (Albany, Schenectady, Troy, Saratoga, and surrounding rural counties.) Our college VITA site is the only college-affiliated program in the coalition. The other VITA sites are run by a variety of non-profit social service agencies, such as the YWCA, Catholic Charities, etc. Their volunteers are community spirited folks from all walks of life, as well as some retired people with a desire to use their skills to help others.

Many local employers, including banks and credit unions, encourage their employees to volunteer at VITA sites. I know quite a few tax professionals who are VITA volunteers as well. They know that low-income working families and senior citizens need competent tax assistance, even if they may not be able to afford to pay their regular fees.

Professionals who volunteer with VITA are a huge resource for the program, and there are VITA volunteer opportunities outside of the regular tax season for those professionals who may be too busy to help us during tax season.

For example, a few VITA sites operate year round, and they help taxpayers who may need to file returns for back-tax years, or who may need to file amended returns.

Experienced tax professionals can be especially helpful in helping to train new VITA volunteers during the last few months of each calendar year, before the filing season begins. Last year, I reconnected up with a former student of mine from 25 years ago--he turned out to be a lawyer who was a VITA volunteer too! He was helping out an IRS employee who was training new volunteers in the fall.

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